US-China trade talks kick off in Shanghai with little fanfare

The latest round of US-China trade talks began in Shanghai on Tuesday morning in extremely low-key fashion, with both sides seeking to play down expectations of a quick end to the trade war.

It is the first time Shanghai has hosted talks during the trade war and the 12th round of negotiations overall.

Negotiators led by US trade representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin on the American side and Vice-Premier Liu He on the Chinese side have previously shuttled between the respective capital cities of Washington and Beijing. The Shanghai talks will also be the first time China’s Commerce Minister Zhong Shan will play a direct role.

However, there were few signs of the talks on the ground in Shanghai. Local media carried little coverage on Tuesday, while there were no reports or pictures of the US delegation touching down in the city, despite this being the first face-to-face meeting between top trade envoys since talks dramatically collapsed in May.

Reporters are camped out in the Hyatt on the Bund hotel in Shanghai, where the US negotiating team is staying. Photo: Handout

The itinerary has also been kept under wraps. According to Bloomberg, the Chinese side will host a dinner at the Fairmont Peace Hotel, a landmark building in the historic Bund area by the Huangpu River, on Tuesday evening.

In the lobby of the Hyatt on the Bund hotel, where the US delegation is staying, there were no signs announcing the talks, but the security presence was heavy outside the hotel. A small group of photographers and journalists were staking out the hotel lobby throughout the day attempting to catch a glimpse of the negotiators.

The low key atmosphere could be a result of the Chinese government’s efforts to maintain tight control on all information related to the trade talks, as a way of keeping expectations in check.

Only Chinese state media outlets and a select few social media accounts have been permitted to report or even comment on the trade talks, which will attempt to build on the “ceasefire” agreed by President Xi Jinping and his US counterpart Donald Trump at their Osaka summit at the end of June.

The Xijiao State Guest Hotel in Shanghai, which is expected to host some of this week’s talks, was where former US President Richard Nixon stayed while preparing the text for the Shanghai Communiqué in 1972. Photo: Handout

A commentary published by the official Xinhua News Agency on Tuesday said that US trade delegates should learn from former US President Richard Nixon’s Shanghai visit in 1972, when Nixon signed the Shanghai Communique “in the sincere hope of normalising bilateral ties” with Beijing.

“Today once again in the metropolis of Shanghai, US negotiators need to demonstrate that same sincerity and, more importantly, reasonable expectations in the relaunched trade talks … to normalise bilateral trade relations,” read Xinhua’s English language commentary.

In another effort to hark back to the spirit of Nixon’s famous visit, some of the talks will take place at the Xijiao State Guest Hotel in the Changning district of Shanghai, where the former president stayed while finalising the wording of the communique.

The main conference hall at the hotel was being decorated with Chinese and American national flags and fitted with security checkpoints on Monday. A member of staff on site told the South China Morning Post that a photo event has been scheduled for Wednesday.

China has been trying to narrow the scope of this week’s talks to focus on direct trade issues while putting long-term structural issues aside for a later date.

It is expected that Chinese imports of American farm products will be on the agenda, while Beijing will push for the US remove tariffs and import embargoes on certain Chinese products and firms.

Arthur Kroeber, head of research at economic consulting firm Gavekal Dragonomics, argued in a note on Monday that the trade talks are waning in relevance.

“Whether or not the US and China strike a trade deal, and if so when, is becoming a less interesting question,” Kroebe wrote. “If there is a deal, it will certainly not restore US-China trade and investment relations to their prior vibrancy. If there is no deal, it’s unlikely that will mean anything more than maintaining the existing high tariffs.”

“Either way, the global macro risk from the US-China trade conflict has ebbed almost to the vanishing point,” he said.